HSBC takes US$378m hit for forex scandal
http://www.channelnewsasia.com/news/business/hsbc-takes-us-378m-hit/1450718.html
TITLE: HSBC takes US$378m hit for forex scandal
POSTED: 03 Nov 2014 17:55
URL:
http://www.channelnewsasia.com/news/business/hsbc-takes-us-378m-hit/1450718.html
HSBC bank on Monday (Nov 3) posted rising third-quarter net profits but took a US$378 million (€302 million) charge against probes into allegations of foreign exchange market rigging.
LONDON: HSBC bank on Monday (Nov 3) took a US$378 million (€302 million) charge linked to allegations of foreign exchange market rigging, and posted mixed earnings for the third quarter.
The Asia-focused lender added in a results statement that talks were ongoing with Britain's Financial Conduct Authority (FCA) regulator over the allegations and warned that a "significant" fine was likely.
The news comes after rivals Barclays and Royal Bank of Scotland last week made huge provisions for possible costs and penalties arising from several probes into suspected price-rigging in the foreign exchange market.
"Discussions are ongoing with the UK FCA regarding a proposed resolution of their foreign exchange investigation with respect to HSBC Bank plc's systems and controls relating to one part of its spot FX trading business in London," the bank said on Monday.
"Although there can be no certainty that a resolution will be agreed, if one is reached, the resolution is likely to involve the payment of a significant financial penalty. We continue to cooperate fully with regulatory and law enforcement authorities in the UK and other jurisdictions."
HSBC added on Monday that its earnings after taxation climbed seven per cent to US$3.431 billion in the three months to September 30 from a year earlier, boosted by falling impairments. However, adjusted pre-tax profits sank 12 per cent to US$4.4 billion in the third quarter, as it set aside around US$1.7 billion to cover a series of one-off charges.
HSBC also took a US$701 million provision to compensate customers for mis-sold products and US$550 million for a settlement with the Federal Housing Finance Authority. In addition, restructuring costs were US$68 million. Total revenues meanwhile were almost flat at US$15.575 billion in the period.
"The third quarter was a period of continued progress," said chief executive Stuart Gulliver, adding that the bank had maintained a strong balance sheet and robust capital position. "Revenue continued to grow in Commercial Banking, dominated by growth in our home markets of Hong Kong and the United Kingdom. Global Banking and Markets contributed a strong revenue performance."
He added: "Loan impairment charges are lower, reflecting the current economic environment and the beneficial changes to our portfolio since 2011."
- AFP/ec